IMF chief Christine Lagarde interrogated by prosecutors for second day


Christine Lagarde, newly appointed managing director of the International Monetary Fund, arrives for her first day of work at IMF headquarters July 5, 2011 in Washington, DC.


Win McNamee

French prosecutors are questioning International Monetary Fund Managing Director Christine Lagarde for a second day to determine whether she will be investigated as a suspect in a corruption case.

The event took place in 2007, when Lagarde —France’s finance minister at the time — chose to use arbitration to settle a business dispute between a state-owned bank and French businessman Bernard Tapie.

Tapie won a $520 million settlement from the arbitration board, a much larger award than he might have received from a court, the BBC reported.

Although Lagarde isn't accused of personally profiting from the payout, the court wants to determine whether she was complicit in the misuse of public funds by overruling advisers to push for the settlement, Reuters reported.

Questions have also been raised about whether Lagarde was following orders from former President Nicolas Sarkozy or his chief of staff, Claude Gueant, to show political favoritism to Tapie, the according to The Washington Post.

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Lagarde has said the settlement was the best solution at the time.

If she is named as a suspect in malfeasance, she could be forced out of her job at the IMF, the Washington Post reported.

“The executive board has been briefed on this matter, including recently, and continues to express its confidence in the managing director’s ability to effectively carry out her duties,” IMF spokesman Gerry Rice said in a statement reported by the newspaper.